Thursday, April 03, 2008

Whoops! Here it is... Estimated tax time!

I've been so wrapped up in thing lately that I didn't even notice it was getting to be time to do my estimated taxes for the year. Getting taken unawares is no fun, especially when I'll need to figure my estimate taxes and shell out a large sum of money all in the same two-week period.

If you are new to the freelance writing scene — or even if you're not — you should know that you need to pay quarterly tax payments. If you don't, and you owe more than $1,000 in taxes at the end of the year, you will owe a penalty in additon to the taxes.

Basically, you won't be penalized as long as:

1) You owe less than $1,000 at the end of the year, OR
2) You paid at least as much in quarterly payments as you paid last year (and the payments weren't late).

If you haven't paid estimated taxes before, the form you need is here: Form 1040-ES. (Not to be confused with the 1040 Schedule SE, the self employment tax form... Who named these???) Even though I paid my quarterly estimated taxes in both 2006 and 2007, I still like to use the worksheet, because it helps me to see the figures and do the math on paper.


Kathy@TheFlawlessWord said...

You had to remind me, didn't you? I will be spending a good part of the next two weekends doing my own, my brother's and my brother's girlfriend's (don't ask how I got roped into that one) year-end taxes. Then, of course, I have to pay this year's first-quarter taxes. Keep your fingers crossed that I estimated well last year and therefore won't be hit with a double whammy!

Katharine Swan said...

Sorry to be the bearer of bad news, Kathy. :o) I seem to remember you had to pay a penalty last year. I'll definitely keep my fingers crossed for you this year!

Kathy@TheFlawlessWord said...

No, actually, last year I OVERpaid on my federal taxes and was able to apply my excess to my first-quarter payment. This year, I paid in a little less so I'm hoping to break about even. Of course, just about the entire amount I billed in March is going to first-quarter taxes. Nothing like working a full month solely for the government, huh?!

Katharine Swan said...

Oh... Wonder what it was I was thinking of, then.

Yeah, I also hate getting a nice chunk of money and then having to use it all to pay taxes. It's always such a disappointment. :o)


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